Central Business District Gets Revenue Boost
Aug 25, 2016 04:15PM ● Published by Tyler Warren
The expanded tax collection area includes the post office and current city hall. –Tyler Warren
Gallery: Central Business District Gets Revenue Boost [2 Images] Click any image to expand.
Murray’s downtown development got a potentially major funding boost on Aug. 2. In their first meeting of the month, the Murray City Council voted in favor of an ordinance that would expand the Central Business District tax collection area by 10.18 acres.
“We felt it was appropriate taking the revenue so we could adequately provide for the Central Business District,” said District 1 Councilman Dave Nicponski.
Increased tax revenue from investment in the new tax collection area will be subject to the same conditions of the rest of the Central Business District. The base taxable value of the expanded tax collection area (approximately $2 million) will continue to be used as normal.
The redevelopment of this area is governed by state law. Under the law, increased tax revenue from investment is paid to the Redevelopment Agency to facilitate future development in the same area. This process is known as tax increment financing.
The 10.18-acre expansion includes the current city hall, post office, school district and 1.73 acres of private property. The land is part of the Central Business District established in 1982, but was not included in the original tax collection area because it is primarily composed of untaxable public properties.
“As we’re looking at redevelopment, we are looking at the possibility that they will go private taxable in the future,” said Tim Tingey, executive director of the Redevelopment Agency of Murray.
He added that there were no plans to expand the tax collection area further.
“This is the last area that we anticipate being included,” Tingey said.
Murray hopes to break ground on a new city hall next year, likely on a property within the Central Business District. If this happens, the Redevelopment Agency will miss out on potential revenue from privately developing that property. Expanding the tax collection area to include the current city hall property will help offset the loss.
What would potentially be constructed on the current city hall property hasn’t been decided yet. However, infrastructure improvements that are integral to Murray’s plan for downtown development are unlikely to be built without tax increment financing.
The ordinance includes a pass through. Twenty-five percent of tax revenue from new development will go to tax collecting entities that draw their revenue from this land. This includes the county and City of Murray, as well as the smaller Jordan Valley Water and Mosquito Abatement.
Representatives from these tax collecting entities voted unanimously on July 5 in support of bringing the ordinance to the Council for approval.
The pass through does not include the school district, which already receives $502,000 from the Redevelopment Agency budget.
If downtown development goes according to plan, tax revenue could increase for the taxing entities significantly. The Redevelopment Agency projects that the future taxable build out of this area could be as high as $45 million.
Tingey said that it is important to note that expanding the Central Business District tax collection area will not mean an increase in property taxes for residents.
“A lot of people think that this affects the taxes. Property owners will pay the same taxes,” Tingey said. “It’s simply an expansion to include additional properties, so if there’s redevelopment or growth, those funds go to this area for purposes of redevelopment.”
The city made steps toward the current stage of redevelopment in November, when they entered into an agreement with J.R. Miller Enterprises, an investment company. The agreement gave J.R. Miller an exclusive, 18-month contract to work with the city to develop Murray’s downtown. As of this date, no projects have been announced.